Cloudflare last week It announced a $1.25 billion funding program for startups that rely on its Cloudflare Workers. But this is not a mutual fund and this amount is not money for the company.
Instead, it’s an initiative in which the cloud infrastructure company sponsors a group of its start-up clients and introduces them to venture capitalists, each of whom has committed $50 million to support companies that build on Cloudflare Workers. The list of 26 mutual funds includes big players such as NEA and Boldstart and smaller companies such as Pear VC. Cloudflare CEO Matthew Prince tells me the number has continued to grow since the project was announced in September.
The interesting reason for this is that while public companies have significantly increased their presence in start-up financing in recent years, it has been largely through one of two handbooks: companies have either put aside a lot of capital on their balance sheet to support companies neighboring emerging. Or sectors complementing them, or they were launching an acceleration program.
This strategy from Cloudflare looks new. And if it works, it could be a very smart bet. The software primarily helps transfer money to its customers, thus securing their need for the platform, while also attracting startups to consider building on Cloudflare on other platforms – without Cloudflare needing to spend anything. It is worth noting that companies entering this program, regardless of whether they have been offered capital, receive various software features for a year for free.
But would a company like Cloudflare be a good marriage tool? Prince seems to think so – he tells me the idea for the program came from the company’s conversations with venture capitalists.
Originally published at San Jose News Bulletin
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